Transcript Document 7200943

The LP Gas Rural Energy
Challenge
CSD-14 Partnerships Fair – May 2006
Introduction
□ Access to affordable, reliable energy services is a
prerequisite for sustainable development and for achieving
the Millennium Development Goals
□ Two billion people worldwide lack access to electricity and
a further two billion people depend on traditional fuels
(wood, dung) for cooking and heating
□ Energy distribution to rural areas is often difficult or not in
place
CSD-14 Partnerships Fair – May 2006
What is the LP Gas Rural Energy
Challenge?
□ A Public – Private Partnership (UNDP/WLPGA)
□ Address lack of access to clean energy through the use of LP Gas
□ Improve living standards
□ Contribute to achieving the Millennium Development Goals
□ Create viable and commercially sustainable LP Gas markets in rural /
suburban areas of developing countries
□ for domestic consumption
□ for industrial productive uses
□ Through identifying and addressing barriers to rural market
development
CSD-14 Partnerships Fair – May 2006
The WLPGA
- Members and Partners
□ 150 member organisations headquartered in 50
countries worldwide
□ WLPGA unites international and local, private and state companies
involved in one, several or all activities of the LP Gas industry.
□ Producers, marketers, shippers, equipment manufacturers,
distributors, national and regional LP Gas associations and
consulting firms are all represented.
□ WLPGA has many partners at a global level including:
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The World Bank
The United Nations Development Programme
The United Nations Environment Programme
The International Energy Agency
CSD-14 Partnerships Fair – May 2006
LP Gas
- The product
□ A readily available, clean-burning, modern energy carrier;
Liquefied Petroleum Gas (LPG) is one option to support
sustainable rural development
□ LPG has demonstrated health and environmental benefits
compared to traditional fuels
□ LPG is critical for household and productive uses
□ However, availability of fuel, canister size, financing of first costs,
refilling costs and transportation are constraints to LPG use by
poor people
CSD-14 Partnerships Fair – May 2006
CSD-14 Partnerships Fair – May 2006
Why did we form a partnership?
□ Complementary competencies and resources
□ Global reach
□ Experience with partnerships
□ Access to the worlds major private sector companies
□ Comparative advantages as partners
□ e.g. LP Gas is a privately traded good that depends
on public sector determined policies
□ Different entry points (profit vs. non-profit)  same
goal (improved standard of living)
CSD-14 Partnerships Fair – May 2006
Expectations and Indicators
□ UNDP creates awareness and mobilizes financing to
address clean fuels issues
□ Establishment of new, viable markets for LP Gas delivery
and consumption
□ Rural people increase access to LP Gas and appliances
□ Development of markets that adhere to both good safety
and good business practices
□ Lessons learned from public-private partnership are
publicized and replicated
CSD-14 Partnerships Fair – May 2006
Programme plan
□ First key step for the partners was the selection of 6 countries
for multi-stakeholder workshops:
□ Ghana; Honduras; Morocco; South Africa; Vietnam and China
□ Objectives of these workshops are:
□ Initiate dialogue between all stakeholders (public sector,
private sector and consumers)
□ Agree priority actions to remove barriers to development
□ Identify projects to demonstrate feasibility of rural market
development.
CSD-14 Partnerships Fair – May 2006
Multi-stakeholder workshops held in :
Ghana (August 2003)
Honduras (September 2003)
South Africa (April 2004)
Morocco (May 2004)
Vietnam (October 2004)
China (July 2005)
Similar Partnership Outcomes
Interestingly, despite cultural diversity, the 6 workshops
highlighted similarities in terms of barriers
CSD-14 Partnerships Fair – May 2006
Barriers
□ Low density of LPG target population
□ Low purchasing power and even sometimes barter
communities
□ Need for local credit facilities
□ Inadequate cylinder size
□ Lack of safety culture and poor enforcement of regulations
□ Strong competition of cheaper alternative energy sources
(sometimes subsidized)
□ Inadequate energy State policy to stimulate LPG
development (sometimes driving major players away)
□ Weakness of LPG distribution networks in remote rural area
CSD-14 Partnerships Fair – May 2006
Outcomes
Workshop recommendations
• To set up a transversal national LPG industry association
• To initiate a transparent dialogue with the State, on structure,
incentives, safety and law enforcement levels, to create
convergence of interests
• To develop affordable and appropriate appliances
• To activate current local micro-credit facilities
• To seek and tap bilateral/multi-lateral funding
• To test recommendations in field project samples
CSD-14 Partnerships Fair – May 2006
Outcomes in South Africa
A First Pilot Project
Local LPG marketers are involved in a large scale pilot project, to
demonstrate opportunity/feasibility to local government
Description of pilot project:
□ Provide 250,000 poor suburban households currently using kerosene
with small LP Gas cylinders
□ Demonstrate feasibility to government and evaluate
consumption/cost/investment
□ Develop an “approved cooking appliance” switching fund
CSD-14 Partnerships Fair – May 2006
Outcomes in South Africa
Current Status
$3 million invested by Private Sector on new (small) cylinders,
logistics and business development
$60 million fund available from state utility for switching to LP Gas
Phase 1 target (end August 2006): 500,000 new LP Gas fueled
households
Phase 2 target: 3 million households by 2009
CSD-14 Partnerships Fair – May 2006
CSD-14 Partnerships Fair – May 2006
Outcomes in Morocco
□ WS established need of specific credit modalities adapted to
rural households
□ 3 key industry players joined forces with microfinance
institution
□ Extreme pressure on forests additional incentive to promote a
switch from fire wood to LP Gas
□ Microfinance pilot to be launched in 2006
□ Focus on small scale commercial use of LP Gas:
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Communal hamams (baths)
Communal baking ovens
Coffee/tea shop
Drying fruits etc.
CSD-14 Partnerships Fair – May 2006
Learning Process
More accurate evaluation of environment variables:
□ Lack of precise information on regional differences, social
classes, purchasing power, internal migration,…
□ Rural households consumption habits
Examples: Cylinder size, role of retail credit, specific rural
applications, different perceptions of risk, widespread use
of alternative energies (firewood, candles, batteries,
dung,…)
□ Differences in time/urgency perception
CSD-14 Partnerships Fair – May 2006
Learning Process
More accurate evaluation of the limits of players:
 Willingness of Private Sector to risk capital
 The budget/treasury limitation of the States
 The capacity of States to implement large scale new
projects
 The existence of competitive energy lobbies
 The lack of local consumer associations
CSD-14 Partnerships Fair – May 2006
Learning Process
More accurate evaluation of how to efficiently organize the
selection and implementation of the projects
 Necessity of exchanging info in a more transparent way
(government  private)
 Necessity to reinforce the local LP Gas industry association
 Interest of exchanging info with other countries (“do not
reinvent the wheel”)
 Need to integrate all the actors of the (direct) supply
chain in the talks and/or in the industry association
CSD-14 Partnerships Fair – May 2006
Future Challenges & Possible Solutions
□ Different objectives for UNDP, WLPGA, governments,
industry
□ No local permanent operational staff ( “lack of time”)
Slow pace leading to reduced interest/involvement
from all participants
Initiative from UNDP and/or local industry associations
to hire a local operational coordinator
CSD-14 Partnerships Fair – May 2006
Future Challenges & Possible Solutions
□ Rural Challenge objectives could appear incompatible
with governments general policy
Local industry association to start an early and
long term negotiations with government with
backing of UNDP-WLPGA
□ Difficulty for UNDP/WLPGA to identify funding for large
scale key pilot projects
Necessity for UNDP/WLPGA to look for
alternative multilateral / bilateral, private /
public funding
CSD-14 Partnerships Fair – May 2006
Energy for Sustainable Development
□ 1.6 billion live on less than $1/day
□ 2.6 billion live on less than $2/day
□ 2.0 billion people worldwide lack access to
electricity
□ 2.0 billion depend on traditional fuels (wood,
dung) for cooking and heating
□ Access to affordable, adequate energy services
is a prerequisite for sustainable development
CSD-14 Partnerships Fair – May 2006
Energy
and the
MDGs
Energy
MDG 2: Achieve
universal primary
education
MDG 1: Eradicate
extreme poverty
and hunger
MDG 3: Promote
gender equality
and
empower women
MDG 4: Reduce
child mortality
MDG 6: Combat
HIV/AIDS, malaria
and other diseases
MDG 8:
Develop
global
partnership
MDG 5: Improve
maternal health
MDG 7: Ensure
environmental
sustainability
CSD-14 Partnerships Fair – May 2006
Rural Energy Challenges
□ Access to electricity and the services it provides (illumination,
mechanical power, cooling) is extremely limited
□ Majority of heat energy needs come from traditional biomass
(cooking, heating, agricultural processing) such as wood,
agricultural residues, charcoal and dung
□ Family energy needs met largley by women and girls
□ Fuel and water collection limit girls participation in school,
impact literacy, fertility and economic options
□ Low levels of public services (education, health, etc)
impacted by lack of energy
□ Rural jobs and agricultural value added limited by lack of
energy
CSD-14 Partnerships Fair – May 2006
Rural Energy Solutions
□ Access to electricity: especially decentralized
systems – both renewable and conventional
□ Access to modern fuels: higher efficiency, more
heat, less local pollution – LPG is one option
□ Government policies must target rural energisation
and link to other sectors
□ Subsidies should target access not consumption;
business models can really help
□ Focus should be on services not supply
CSD-14 Partnerships Fair – May 2006
Energy for Subsistence
□ Energy is key for meeting basic needs
□ Domestic uses (heating and cooking)
□ Household tasks (water pumping, grinding
and milling)
□ Productive purposes (brick and ceramics
firing, metal working, fish smoking)
□ Social services (health care, education)
CSD-14 Partnerships Fair – May 2006
WEA Findings on Rural Energy
□ Technology is necessary, but is not the only
ingredient for increased energy equity
□ New institutional measures
□ Financing to cover initial capital costs of
devices and equipment
□ Energy initiatives are most successful
when combined integrated with other
policies
□ Local populations must be involved in
making decisions about energy systems
CSD-14 Partnerships Fair – May 2006
Women and Energy
Lack of access to energy affects women and
girls disproportionately
□ Health: carrying tens of kilos of fuelwood over
long distances; indoor air pollution
□ Literacy: girls are kept from school
□ Fertility: illiteracy increases family size
□ Safety: household fires, personal attack
□ Economic opportunities: heat using activities
□ Energy policy: gender neutral or gender blind?
(see Generating Opportunities, UNDP 2001)
CSD-14 Partnerships Fair – May 2006
Two Distinct Energy Issues
□ Electric energy
□ Key for providing services such as lighting, access
to communication tools (radio, phones, internet)
□ Clean fuels (e.g. Liquefied Petroleum Gas)
□ Reduces drudgery (less time collecting
fuelwood)
□ Also frees time for productive purposes
□ Health benefits (reduces indoor air pollution)
□ Environmental benefits (reduces deforestation)
CSD-14 Partnerships Fair – May 2006
WSSD Government Agreements
□ Support the transition to the cleaner use of liquid
and gaseous fossil fuels, where considered more
environmentally sound, socially acceptable and
cost effective
□ Assist … through public-private partnerships, the
access of the poor to reliable, affordable,
economically viable, socially acceptable and
environmentally sound energy services
CSD-14 Partnerships Fair – May 2006
The LPG Challenge
□ Use of traditional fuels results in: respiratory disease
from indoor and local air pollution, drudgery,
reduced productivity, land degradation, and
constrained income-generation
□ A readily available, clean-burning modern energy
carrier—Liquefied Petroleum Gas (LPG)—is one
option to support sustainable rural development
□ LPG has demonstrated health and environmental
benefits compared to traditional fuels
□ However, availability of fuel, financing of first costs,
and refilling costs are constraints to LPG use
CSD-14 Partnerships Fair – May 2006
A Public-Private Partnership
Issue: Affordability
□ UNDP Strengths
□ expertise on financing
mechanisms
□ capacity building to
support governments in
policy development
□ collaboration with local
organisations to
stimulate investment and
employment generation
Issue: Availability
□ LPG Industry Strengths
□ expanding storage
capability for imported
LP Gas to capture
shipping economies of
scale
□ addressing recurring user
costs through investment
in the production of
smaller, more affordable
bottles
CSD-14 Partnerships Fair – May 2006
Expectations and Indicators
□ UNDP creates awareness and mobilizes financing to
address clean fuels issues
□ Establishment of new, viable markets for LP Gas
delivery and consumption
□ Rural people increase access to LP Gas and
appliances
□ Development of markets that adhere to both good
safety and good business practices
□ Lessons learned from public-private partnership are
publicized and replicated
CSD-14 Partnerships Fair – May 2006
Next Steps
□ Identify further pilot countries
□ Define clear and feasible projects based on workshop
findings
□ Secure project financing from private and public
sources
□ Hire a local coordinator in each selected country
□ Execute projects and scale up
□ Monitor and report on progress
□ Transfer knowledge
CSD-14 Partnerships Fair – May 2006
Conclusions
□ LP Gas is a readily available, clean-burning, modern
energy carrier
□ Safety and affordability for consumer is key
□ Whilst allowing for suitable distributor margin
□ Taking account of alternative traditional fuels
□ Progress is measured differently by the stakeholders
□ Private Sector vs Public Sector priorities can be different
□ Success will come from recognising a win-win-win
solution is both possible and necessary
CSD-14 Partnerships Fair – May 2006
LP Gas Rural Energy
Challenge
www.undp.org/energy
www.worldlpgas.com
CSD-14 Partnerships Fair – May 2006